As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the home construction materials industry, including Gibraltar (NASDAQ:ROCK) and its peers.
Traditionally, home construction materials companies have built economic moats with expertise in specialized areas, brand recognition, and strong relationships with contractors. More recently, advances to address labor availability and job site productivity have spurred innovation that is driving incremental demand. However, these companies are at the whim of residential construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates. Additionally, the costs of raw materials can be driven by a myriad of worldwide factors and greatly influence the profitability of home construction materials companies.
The 12 home construction materials stocks we track reported a mixed Q2. As a group, revenues missed analysts’ consensus estimates by 2.4% while next quarter’s revenue guidance was 22.9% below.
The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Thankfully, home construction materials stocks have been resilient with share prices up 8.7% on average since the latest earnings results.
Gibraltar (NASDAQ:ROCK)
Gibraltar (NASDAQ:ROCK) makes renewable energy, agriculture technology and infrastructure products. Its mission statement is to make everyday living more sustainable.Gibraltar reported revenues of $353 million, down 3.3% year on year. This print fell short of analysts’ expectations by 5.5%. Overall, it was a slower quarter for the company with a miss of analysts’ earnings estimates.
“We delivered solid execution and strong operating cash flow performance across Gibraltar, generating $36 million, while overcoming two market headwinds that impacted growth in our Residential and Renewables businesses in the quarter. ” stated Chairman and CEO Bill Bosway.
Gibraltar delivered the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 16.3% since reporting and currently trades at $67.18.
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Best Q2: JELD-WEN (NYSE:JELD)
Founded in the 1960s as a general wood-making company, JELD-WEN (NYSE:JELD) manufactures doors, windows, and other related building products.JELD-WEN reported revenues of $986 million, down 12.4% year on year, falling short of analysts’ expectations by 1.4%. However, the business still had an exceptional quarter with an impressive beat of analysts’ organic revenue estimates and an impressive beat of analysts’ earnings estimates.
JELD-WEN scored the highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 7.2% since reporting. It currently trades at $15.74.
Weakest Q2: Simpson (NYSE:SSD)
Aiming to build safer and stronger buildings, Simpson (NYSE:SSD) designs and manufactures structural connectors, anchors, and other construction products.Simpson reported revenues of $597 million, flat year on year, falling short of analysts’ expectations by 1.3%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
Interestingly, the stock is up 5.5% since the results and currently trades at $190.81.
Trex (NYSE:TREX)
Addressing the demand for aesthetically-pleasing and unique outdoor living spaces, Trex Company (NYSE:TREX) makes wood-alternative decking, railing, and patio furniture.Trex reported revenues of $376.5 million, up 5.6% year on year. This print came in 2.9% below analysts' expectations. Overall, it was a slower quarter as it also recorded a miss of analysts’ organic revenue estimates.
The stock is down 16.5% since reporting and currently trades at $63.89.
Fortune Brands (NYSE:FBIN)
Targeting a wide customer base of residential and commercial customers, Fortune Brands (NYSE:FBIN) makes plumbing, security, and outdoor living products.Fortune Brands reported revenues of $1.24 billion, up 6.6% year on year. This result came in 3.1% below analysts' expectations. Overall, it was a softer quarter as it also logged a miss of analysts’ earnings and organic revenue estimates.
The stock is up 23.1% since reporting and currently trades at $88.87.
This content was originally published on Stock Story
